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Brazilian meat processor JBS has agreed to sell a number of its beef processing businesses in South America to rival processor Minerva in a deal worth $300m (€266m). The deal includes the sale of five processing units located in Argentina (1), Paraguay (3) and Uruguay (1), which have a combined slaughtering capacity of 9m head of cattle per annum.
The businesses account for less than 2% of total turnover and JBS has said it will use the proceeds from the sale to reduce its debt burden, which stood close to $14.6bn (€13bn) at the end of March 2017.
The sale comes with a number of JBS officials, including the two Batista brothers who own the company, in the midst of a corruption scandal that has rocked Brazil. Last week J&F Investimentos, which is the parent company of JBS, agreed to pay €3bn in fines after seven senior executives in the company admitted to paying hundreds of millions in bribes to politicians, lawmakers and state officials.
The corruption and bribery scandal has led to a sharp rise in the cost of borrowings for JBS and the cash generated from the sale of these businesses will be used to shore up these additional costs. With $14.bn in debts, JBS is highly leveraged with a debt to earnings ratio of 4.2 times.
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